Grupo Mercantil Colpatria is one of Colombia’s largest financial conglomerates.
The purchase price of COP672bn (€259m) covers the four insurance companies of Grupo Mercantil Colpatria, which handle property and casualty, life insurance and workers’ compensation, capitalisation, and voluntary healthcare, according to a statement issued by the Axa Group this morning.
AXA said it planned to consolidate the operations it is acquiring within its existing operations in the Mediterranean and Latin American region.
Colpatria Seguros is Colombia’s fourth-largest insurer, with around a 7% market share. Multi-tied agents represent approximately 40% of total premiums sold.
The company was described by Axa today as a "leader" in the Colombian market segments of compulsory motor third party liability and workers’ compensation, with a 15% and 14% share of those markets in Colombia, respectively.
Henri de Castries, chairman and chief executive of Axa, said the acquisition would give his company a “unique opportunity to enter the fast-growing Colombian insurance market with well-established positions in all lines of business, while benefiting from the support of a solid and reputable local partner”.
Colpatria Seguros’ “sustained historical growth and profitability – both above market average – [will] provide Axa with a strong platform for further development,” he added.
“This operation strengthens AXA’s growth profile, and marks another milestone in our strategy of accelerating in high-growth markets, which is at the heart of our Ambition AXA plan.”
Fifth largest LatAm market
According to Axa, Colombia’s insurance market is Latin America’s fifth largest, generating around €8bn in revenue in 2012. Property and casualty insurance represents close to 50% of the market, followed by the life, workers compensation and voluntary health sectors. The industry’s top five players represent around 50% of total sales, with distribution dominated by multi-tied agents (52%) and brokers (31%).
Over the past four years, the market has averaged 12% annual growth but, according to Axa, represents "further upside potential" given that its penetration rate is a "low" 2.4%.
Colombia is located on the northern edge of South America and shares borders with Ecuador, Peru, Brazil, Venezuela and Panama. The country has a population of around 47.7 million, and a gross domestic product of €288bn. It is sometimes described as the world’s most-populous Spanish-speaking nation after Mexico,
Long associated with cocaine production and violent crime, and wracked by a decades-long struggle against revolutionary guerrillas known as the Farc. Colombia in recent years has begun to develop economically, with a growing tourism business and even, in the long-notorious city of Medellin, an emerging reputation as a hub for business start-ups. Oil extraction is also on the rise.
